KUALA LUMPUR (Aug 30): IOI Properties Group Bhd will embark on its third property project in China, after winning the tender to acquire a 6.2-acre (2.51ha) parcel of leasehold land in Xiang An central business district in Xiamen, China, for 2.32 billion yuan (RM1.4 billion).

The group said it has been sourcing for land banks with development potential following the completion of its maiden property development, that is, the IOI Park Bay in Jimei district of Xiamen and the successful launch of its second Jimei mixed-use development called IOI Palm City.

In a filing with Bursa Malaysia yesterday, IOI Properties said the land in Xiamen was acquired via its indirect 99.8%-owned subsidiary IOI (Xiamen) Properties Co Ltd through a competitive bidding conducted by the Xiamen Bureau of Land Resources and Real Estate Management. It plans to allocate 91% of the land for residential development and the rest (9%) for commercial development and a community service centre.

It added that the consideration for the land was arrived at after taking into consideration the location of the land, in addition to the permissible development plans intended for the land. Key future developments in the vicinity of the proposed land include schools, a new Xiang An hospital and a new Xiamen international airport, which will be completed in 2020.

“The gross development value and gross development costs of the proposed development to be undertaken on the proposed land have yet to be determined as the project development plans are still at a preliminary stage,” said IOI Properties.

It added that it will fund the acquisition through sources of funding available to the group, including internal funds.

IOI Properties believes the land tender provides an opportunity for it to replenish its existing land bank in China.

“Barring any unforeseen circumstances and subject to all required approvals being obtained [if any], the land tender is expected to be completed by the third quarter of 2016,” said IOI Properties, adding that it is expected to contribute positively to the group’s future earnings and earnings per share.

The land tender will see the group’s gross gearing rise from 0.29 times to 0.33 times, while its net gearing will increase from 0.16 times to 0.25 times.

IOI Properties shares closed up two sen or 0.8% at RM2.52 yesterday, with a market capitalisation of RM11.12 billion.

This article first appeared in The Edge Financial Daily, on Aug 30, 2016. Subscribe to The Edge Financial Daily here.

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